Bloomberg: Before Alameda imploded, it made a "big bet" on the encryption mining company Genesis
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Odaily Translator | Nian Yin Si Tang
, original author: Yueqi Yang & David Pan
Odaily Translator | Nian Yin Si Tang
A bigger question surrounding the collapse of the cryptocurrency empire Sam Bankman-Fried (SBF) built was the billions of dollars in venture capital poured into it by his trading arm, Alameda Research.
His biggest bet appears to be on bitcoin mining firm Genesis Digital Assets at the height of the crypto gold rush. Alameda continued to pour money into the company even as the price of bitcoin plummeted and soaring energy costs wreaked havoc across the industry.
In total, Alameda invested about $1.15 billion in Genesis Digital, valuing the company at $5.5 billion in an April funding round, according to an internal spreadsheet listing FTX and Alameda’s venture capital portfolios obtained by Bloomberg News. . The miner is not affiliated with crypto lender Genesis, whose lending arm has halted customer withdrawals.
The investment will be conducted in 4 rounds from August 2021 to April this year. Alameda's initial capital injection of about $100 million into Genesis last August was followed by $550 million in January, $250 million in February and $250 million in April this year. The total value of the deal makes it the largest single venture investment by Alameda and FTX, according to the spreadsheet.
Representatives for Iceland-based Genesis Digital did not respond to a request for comment. Caroline Ellison, principal of Alameda Research, did not respond to a request for comment.
During the recent cryptocurrency boom, miners have been able to raise billions of dollars from equity markets and lenders on generous terms, often using purchased equipment as collateral for loans. In the first half of this year, the profit margin of the bitcoin mining industry was as high as 90%.
But crypto mining has quickly gone from being one of the most lucrative sectors of the digital world to one of the most sluggish as bitcoin plunges, energy costs soar and competition among miners intensifies. A number of large mining firms are on the brink of bankruptcy, with a key measure of mining revenues falling to record lows.
Genesis Mining, the predecessor of Genesis Digital Assets, is one of the oldest cryptocurrency mining companies, opening its first mine in Iceland in 2014. Founder Marco Streng later launched Genesis Digital Assets in April 2021, shifting his focus to mining bitcoin himself rather than becoming a crypto service provider, according to his LinkedIn blog post.
“We want to go big,” Streng posted on LinkedIn in June 2021, about two months after Alameda made its first investment in the company. Other investors include Paradigm, NYDIG, Ribbit, Electric Capital and Skybridge Capital.
